San Miguel Corporation
Porter’s Five Forces Analysis
Threat of New Entrants (LOW)
Process - After a businessman has met his production needs, it would cost
approximately four figures to set up room and schedule in a commercial kitchen
before he manufactures products. This is due to a lack of room, a lack of labor,
and, of course, a lack of food.
Cost of Making the Product - After the business owner becomes too large for
that, he must invest approximately five figures in order to interact with the co-
packer and have his product created exactly how he desires, which, depending
on the product, can be either simple or quite difficult.
Foreign Brands - The Philippine market becomes a target for overseas brands
offering comparable products and services.
Branding - Every day, brand images flood everyone to the point that small firms
who have an internet presence, make their customers feel unique, and genuinely
communicate with them will reap the most benefits.
Cost - When costs are minimal and distribution is nearly free, people can
produce garbage, and if it strikes a chord with the audience, it may prosper.
When entry barriers are lowered, you receive less quality, or at least it is believed
that you get poorer quality outputs. Quality is not limited to the consistency of
your product's flavor. It has a different connotation with each brand.
Power of Supplier (LOW)
Low concentration of Suppliers – Given the abundance of providers and
vendors capable of meeting SMC's standards, the business has limited
bargaining leverage among suppliers.
High Product Differentiation – Because the inputs or raw materials required to
manufacture SMPF's goods are not substantially distinct, SMC may have several
suppliers.
Low Switching Costs – SMC is a massive company, and suppliers have little
leverage to increase prices.
No threat of forward integration – Suppliers with significant negotiating
strength will demand a premium from the SMC Succession
Low Production –Shortages are quite unusual, as logistic systems improve with
time, ensuring that SMPF has sufficient material for output. If they ever encounter
a scarcity, a replacement for the inputs is available.
Power of Buyer (LOW)
Demand and Supply – Demand and supply for all commodities fluctuate
throughout time. It is influenced by national, seasonal, and worldwide
circumstances, as well as a variety of other significant elements.
Major Commodities Issues – SMC manufactures significant commodities and
has a diverse product range, which influences how improbable a client would
migrate to a rival.
Competitive Strategy of the Product – Buyers has more or less influence
depending on their degree of interest and focuses on the goods. By pushing
suppliers to lower their prices and demanding high-quality products and services,
dominant buyers may turn the tables on powerful suppliers, fostering competition
amongst industry players on the basis of price and quantity.
Level of Cost – The capacity of San Miguel Corporation to achieve its
commercial goals. Profitability is reduced and the sector becomes more
competitive as a result of strong negotiating power. Whereas when buyer power
is weak, the sector becomes less competitive and profitability and expansion
potential for manufacturers expand.
Economic and Political Issues – Prices are also influenced by economic and
political developments occurring in the nations that produce or use the item.
When an economy's health deteriorates, it diminishes the buying power of its
citizens, reducing demand for commodities and affecting the general movement
of prices. Thus, prices in the food business are mostly determined by the
country's economic situation, rather than by the buyers.
Threat of Substitutes (HIGH)
Price Performance – Local and international brands with a lower price point may
serve as replacements for budget-sensitive buyers.
Offers lower price – Switching costs are very cheap, and purchasers are
motivated to seek alternatives if they are dissatisfied with the offerings.
Consumers may choose for less expensive brands, a practice known as brand
flipping.
Other alternatives are available – A high substitution threat indicates that
consumers may fulfill their demands via the usage of alternative
products/services from other sectors.
High Competition Level – The industry is very competitive, and companies with
design and development skills in addition to manufacturing expertise may have a
stronger bargaining position in the market.
Substitute product offers the same or even better quality – Due to the
availability of replacement goods and services, the competitive situation for the
San Miguel Corporation and other established competitors is difficult.
Competitive Rivalry (HIGH)
Pressure among Competitors – High competition demonstrates that the San
Miguel Corporation may encounter significant pressure from competing
enterprises, which may restrict the development potential of one another.
Customers’ Choice – Rivalry will also be fierce if people are dissatisfied with
their current brands and it becomes simpler to acquire customers from other
brands owing to cheap switching costs.
Competitors’ Products and Services – Competitors of comparable scale,
selling similar goods, and experiencing weak industry development often pursue
aggressive measures against one another.
Revenue – SMC is the market leader in beer, which generates the most income
for the company. SMC's broad product portfolio gives them more leverage to
retain supremacy over rivals.
Factors affecting the SMC Goods – Rivalry is fierce in the SMC sector, and
one of the market leaders has established itself as a major player. The sectors in
which SMC operates provide significant entry obstacles, including economies of
scale, brand recognition associated with existing SMC goods, government
regulation, and significant financial needs.
Specialist knowledge
SMC supports comprehensive development principles, including business / management
skills, technical skills, task and person orientation, values, and attitudes. Corporate Human
Resources are responsible for continuous learning within the group. The administrator is
primarily responsible for creating continuous learning opportunities for each unit of work.
Employees are also responsible for their own learning and learning initiatives. This is closely
related to the fact that the knowledgeable SMC, which has existed for 130 years, should still
keep up with the trends.
Quality
The company’s quality management is more focused on continuous improvement and customer
relations.
Capital
Economies scale
